Monday, 24 October 2011

The price of Greek failure is EU rule

It’s maybe hard for Greeks who don’t live in Europe to appreciate, but, among those countries in the eurozone – and even among those in the EU and waiting to adopt the euro – there exists an almost irreversible trend to forge closer economic union, and that rather than the current crisis deflecting them from this goal, all it has served to do is convince them to accelerate the process.

This is why all this talk about Greece abandoning the EU and the euro and taking up the drachma again, is just pie in the sky. It’s not going to happen. What is going to happen is, in fact, the opposite, which is deeper economic integration and more supervision and oversight of national economies. Of course, having Brussels or Frankfurt telling Athens (and Rome, Madrid and so on) how to run its economy represents a massive surrender of national sovereignty; but, the truth is, that this is the price Greece is going to have to pay for its abject failure to reform its economy and society by itself.

17 comments:

Anonymous said...

Greece should not feel any degree of guilt nor self apparaisalon account of its present plight. The EU does not have a future, it never had a future because it did not carry the spirit of a European Union. From a 6 member purely economic trading bloc it grew into a mammoth apparatus with its sole and ultimate goal of embracing as many economic spheres as possible. Greece's fault lied in having accepted the entrapment into the EU corral. And even in this proposition the Greek people had nothing to say. It was betrayed by its leaders, the class of leadership Greeks produced was of the stuff found in garbage bins inside a latrine. There is no solution, nor exit out of this cul de sac the country has landed itself. The normal and correct way would be to move out of the EU, discard the sick Euro toilet paper and revert to the drachma, devalue and " try to be competitive ???" --- famous words of the hyena papandreu whose understanding of economic matters is what Goldman Sacks-Lehman Bros-Cohen and Co., have pumped into his empty hollow skull. The formula of getting rid of billions of mountains of accumulated debt is not by contracting additional ---never to be paid---debt. It is phantasmagoria to think---papandreu's quote--that Greece can become competitive. Greece can not become competitive with the Euro as its currency -- it is a discordant and dissonance factor in the equation of EU economic fraudsters. Don't seek magic formulas peddled by oil sleeek snake oil salesmen. The financial punks of the EU pumped billions of Euros into the pockets of prodotes politicos-- clerks of the EU bureaucracy-- knowing full that these debts were unpayable. The trecherous political classs gleefully took these loans knowing full well they were not to be paid. Who is fooling around with whom ? There is no solution, but to default and sent the EU jackals howling back to Brussels. To do this you need a measure of class leadership, patriotic duty, traditional respect and valour. These are in very short supply, lacking altogether I would say. Greece ceased to be a sovereign nation. Greece is at best a EU protectorate, at worst becoming a Neo Ottoman province. Both options are diabolical. The present class of robbers and thieves throttling the Greeks must be disposed of, it is imposible to find a resolution to this impasse with the same people who brought us to this pass. It is like asking an undertaker to revive the rigor mortis corpse .

Anonymous said...

Antheus


The price to be paid for not reforming society. What society needs to be reformed ? Why does it need to be reformed ? Society, politics are ever evolving forces, wittingly or unwittingly they happen in a historical context. By whom for whom are these reforms needed; by Greeks ,or by Paris, London, Frankfurt ? The politicians keep on blurting grandiloquently of reforms; what reforms please gentlemen, reforms imposed by the EU komissariat ? Reforms that can guarantee the political men another four,five years in power ? Can someone spell out these abstract and esoteric reforms we hear so much? Can the government, in their wisdom --short of passing decrees in the closed chambers of parliament-- spell them out and show the way to the desired results ? Reforms by creating millions of unemeployed, by importing masses and masses of illega migrants to take work slots in place of Greeks ?. Reforms by privatizing national assets, selling national patrimony ? ; if this is the kind of reforms our politicians want to usher in Greece, we are doomed to a slow but certain extinction . These reforms are a script of de-nationalization of Greece, deracination of Greece, the death knell of the Greece we all know. Greeks have become accustomed to the easy life, they can no longer discern right from wrong, they have lost the art and skill of discrimination. The easy , undiscipline life leads straight into the straitjacket of enslavement. It might be that Greeks will not be able to escape the legacy of a slave nation which endured 4 centuies of ottoman rule. Maybe it is ingrained in us to have someone else telling us what to do ? There is mass protests in the streets of Greece, but these protests sadly betray the lack of vision and goals of the protesters. It is protests at random, because wages and other financial benefits are being taken away, but the protests are not directed at the culprits, nor do they target the men responsible who have created this mayhem for the Greek people.

lastgreek said...

In all seriousness, the Greeks are no more recklessly extravagant in their finances than any other European nation (keeping withing the Eurozone here). And one can succesfully argue that the facts show that that they are even less so!

Then how did the dummies get into this mess? Massive tax evasion by the rich and well off Greeks, and an unsustainable defense budget. After 40 years or so, the math -- the annual budget shortfalls -- catches up with you. And I don't blame the Greeks for the latter, btw, because if the rule of international law were observed, by the Europeans and the Americans, the Turkish threat would be nonexistant today and Cyprus would be free and unoccupied. Now add an individualistic society -- so, you know, fuck the collective -- to the above, and what do you get? A failed state walking.

Did anyone here watch the rugby final yesterday? Though they lost, it was an admirable effort by the French against the All Blacks.

Paul Zagoridis said...

Are you all trying to say that no one in 40 years warned that Greece's fiscal policies were unsustainable?

Why will nobody acknowledge that Greeks voted for successive governments who bought the voters off with handouts, perks and the promise of pensions.

Reforms are not mandatory unless you want to remain competitive in an international market. Otherwise give up German cars, Japanese TVs or Chinese computers and consumer goods and live isolated from the international community. Become self sufficient.

John Akritas said...

You could argue, Paul, that what you describe – timid governments giving in to rapacious interest groups and voters acting not as citizens but insatiable consumers – applies not only to Greece, but to nearly all advanced economies, in the EU, North America and elsewhere. It's not just the Greek economy up the spout.

Greece's particular problem – in my view – was that this failing economic model came along at the same time as a collapse of the state, the political system, culture, ideology and all the rest. An economist would tell you that it was the warped economy that started it all off; but a political scientist would stress the perverse nature of the Greek state and civil society.

Paul Zagoridis said...

Timid governments... and voters... as insatiable consumers is so true.

I think the perfect storm you describe - failing economic model coinciding with the collapse of everything else - defies purely economic analysis. Many economies have faced and recovered from similar structural challenges.

There is a uniquely Greek ideological and philosophical world-view that even diaspora Greeks don't really get. The perverse nature of Greek state and civil society as you put it.

Hermes said...

Some of the comments above are indicative of the level of irresponsibility that pervades almost all of Greece. For example, “Greece should not feel any degree of guilt” and “[Greece] was betrayed by its leaders”. Yes, of course people are always right and everybody else is to blame. I can hear the very distinct echoes of KKE/SYRIZA in those comments. Perhaps it would be more accurate to accept that Greeks themselves treat their own country and its future generations like a latrine. The last few months proves my point that Greeks are the least patriotic people in the world!!! Go back to the drachma and become like Argentina. At least the Romance of it all will make us feel cool when we are chugging on the 100th cigarette in a dingy bar in Exarcheia. But do you know what a haircut will entail in reality? Greek depositors will all of a sudden own Greek bank shares and the net present value of pension benefits will nosedive. Do you know what an exit from the euro will entail in reality? All those mostly useless consumer goods that Greek’s have become accustomed to buying (whilst paying for with olives) will become so much more expensive. And Greek society does not need reform. Ha ha ha!! What a joke! Most of the children stay at home until 40 years old (and some never leave), the low birth rate means that soon Pakistanis will be flying Greek F-16s, the grossly inefficient service provisioning of public enterprises make Greece a nightmare to do business and it has one of the highest teachers per capita in the world but also one of the highest after school tutoring rates in the world. The reforms are firstly needed for the honest autochthonous Greeks that have tried to make a living for themselves and their children. When are we going to realize they will be the first ones who will pay if the appropriate reforms are not implemented.

John Akritas said...

Occasionally, just to see what Greek Marxists are thinking, I'll check out Greek Left Review. There was a piece on it the other day by Costas Douzinas (http://greekleftreview.wordpress.com/2011/10/21/greeces-lines-now-are-clear/#more-1464), which said the following:

'This government believed that by legislating a few statutes which undermine the Greek ethos of ancient values, conventions and principles, it will create a new people. The mission was to replace the customary care for others with indifference, traditional hospitality with the exploitation of strangers, the consolations of friendship with solitary depression.'

Greece as a place of 'customary care for others', 'hospitality' and 'friendship'? Since when? The idea that Greece – before the debt crisis – was some model society of solidarity and altruism is risible.

lastgreek said...

Are you all trying to say that no one in 40 years warned that Greece's fiscal policies were unsustainable?

Even if the dire financial warnings were tattooed on the foreheads of the Greeks, they wouldn't have cared. In an individualistic society, it's every one for him/herself. And man is this evident in modern Greece. Here's an observable example that can be found, I dare say, in any part of Greece, especially in the cities. Enter a Greek home and, in all probability, it would be clean and tidy. Now, step outside said home and -- surprise, surprise -- there's garbage literally dumped in front of the home on the street. Why? Does anyone care to deny this stinking modern Greek phenomenon?

Why will nobody acknowledge that Greeks voted for successive governments who bought the voters off with handouts, perks and the promise of pensions.

It's acknowledged, Paul.

Reforms are not mandatory unless you want to remain competitive in an international market. Otherwise give up German cars, Japanese TVs or Chinese computers and consumer goods and live isolated from the international community.

Cheap credit is a nymph (I think the word "whore" is more apt) that is hard to resist. It's a global phenomenon actually.

lastgreek said...

It appears that the private bond holders of Greek debt -- including the debt held by the Greek banksters and the Greek pension funds -- which amounts to about 200 billion euros of a total debt of about 400 billion euros, will undergo a 50% haircut.

If this is indeed the case, Greece has just "made" 100 billion euros today. Not bad for a day's work, eh?

:-(

Why the long face, you ask?

Because it's not good enough.

I wonder how the Italians, Portuguese, Irish, and the rest of the Euro-up-to-their-ears-in-debt countries are going to react. You think they're not going to demand "haircuts," too?

2011 international barbershop quartet champions :-)

http://www.youtube.com/watch?v=uRu3CZfteyY

John Akritas said...

As I understand it, LG, the flaw in the plan for a Greek haircut is that it is voluntary, and that there's no real financial imperative for the holders of Greek debt to go along with writing off all the money they're owed by Greece – in which case a default is still the likeliest outcome for Greece, unfortunately.

lastgreek said...

From what I am reading, J, it's a "shotgun wedding" -- not much of a choice.

Also, note that the ECB and IMF debt holdings are excluded.

John Akritas said...

And it's all predicated on Greece carrying out reforms and dismantling the PASOK deep state, which I don't believe will happen.

Hermes said...

I don't think this haircut is really voluntary - the July 21 one was. The debt reduction is not that massive, Greece will still have a debt to GDP ratio of over 120% in 8-10 years. Most economists believe that the upper ceiling before problems begin to occur is about 90% of debt to GDP. Also, the 120% figure is predicated on some relatively optimistic assumptions on the denominator, GDP, growing by around 3%. Also, a haircut means that the Greek and Cypriot banks are effectively involvent and will need recapitalisation and some will probably be forced to merge - the latter is a good thing. How do you feel about the Greek government owning the banking sector? Further, Greece's pension funds, which already face massive unfunded liabilities will be forced to write down some of their holdings in Greek debt. Finally, regardless of whether the Troika cuts 50% or 100% of the debt Greece will still be running a primary budget deficit (primary budget is the budget minus interest payments). Therefore, Greece will either have to still beg for money or will have to tackle the real monster behind all this, the State, in order to stimulate growth rather than raise taxes and return the budget to a surplus. Given that an idiotic PASOK government is in power, which lack the mettle and imagination, to do anything other than attack private initiative, then forget about any real improvement here.

lastgreek said...

Well the key phrase as J mentioned earlier is "voluntary," even though that is probably not the case. And why the semantics? Well, because it would automatically trigger all the trillions of dollars worth of credit default swaps if it were not called "voluntary." That is why you have the lawyers of the International Swaps and Derivatives Association (ISDA) tripping over themselves telling the press that it's "voluntary."

Anyway, like Hermes alluded to -- this latest is nothing to write home about. At the end of it all, we can expect more money printing (loss of purchasing power), and more taxpayer bailouts for the banksters.

Yeah, there is no leadership in modern Greece. Probably explains why the ancient Greek verb ἄγω, -- to freakin' lead, for heaven's sake -- is not in the modern Greek lexicon.

John Akritas said...

Although, LG, I did hear a couple of economists on Cyprus TV say that it would be hard for banks to excuse themselves from this 'voluntary' participation, for two reasons:
1. The political pressure that the EU would exert on them;
2. What the banks are being asked to do is hand in their existing Greek bonds for bonds that will mature in 10 years' time. Therefore, if they choose to hang on to their existing bonds and insist Greece pays now and Greece, as is likely, defaults, then the banks will risk ending up with nothing.

lastgreek said...

Yes, it's either you take this "vuluntary" deal, or else -- or else, you'll get screwed. Priceless!

One guy who is super screwed right now is Hugh Hendry. This guy was loaded with Greek CDS's. That is all he talked about the last couple of years: his bet on a Greek default. And he bet correctly on the CDS's. It's just a pity that they changed the rules of "the game" on him ... after the fact ... lol

Seriously, J, there is not even honour amongst thieves these days. What is the world coming to :-(